Abercrombie & Fitch 2014 Annual Report Download - page 16

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The impact of war or acts of terrorism could have a material adverse effect on our operating results and financial condition.
The continued threat of terrorism and the associated heightened security measures and military actions in response to acts of
terrorism have disrupted commerce. Further acts of terrorism or future conflicts may disrupt commerce and undermine consumer
confidence and consumer spending by causing domestic and/or tourist traffic in malls and the Company's flagship and other stores
to decline, which could negatively impact our sales revenue. Furthermore, an act of terrorism or war, or the threat thereof, or any
other unforeseen interruption of commerce, could negatively impact our business by interfering with our ability to obtain
merchandise from foreign manufacturers. Our inability to obtain merchandise from our foreign manufacturers or substitute other
manufacturers, at similar costs and in a timely manner, could adversely affect our operating results and financial condition.
Changes in the regulatory or compliance landscape could adversely affect our business and results of operations.
We are subject to numerous laws and regulations, including customs, truth-in-advertising, securities laws, consumer protection,
general privacy, health information privacy, identity theft, online privacy, employee health and safety, international minimum
wage laws, unsolicited commercial communication and zoning and occupancy laws and ordinances that regulate retailers generally
and/or govern the importation, intellectual property, promotion and sale of merchandise and the operation of retail stores, direct-
to-consumer operations and distribution centers. Laws and regulations at the state, federal and international levels frequently
change, and the ultimate cost of compliance cannot be precisely estimated. If these laws and regulations were to change, or were
violated by our management, associates, suppliers, vendors or other parties with whom we do business, the costs of certain
merchandise could increase, or we could experience delays in shipments of our merchandise, be subject to fines or penalties,
temporary or permanent store closures, increased regulatory scrutiny or suffer reputational harm, which could reduce demand for
our merchandise and adversely affect our business and results of operations. Any changes in regulations, the imposition of additional
regulations, or the enactment of any new or more stringent legislation including the areas referenced above, could adversely affect
our business and results of operations.
Our Asset-Based Revolving Credit Agreement and our Term Loan Agreement include restrictive covenants that limit our
flexibility in operating our business.
Our Asset-Based Revolving Credit Agreement expires on August 7, 2019 and our Term Loan Agreement has a maturity date
of August 7, 2021. Both our Asset-Based Revolving Credit Agreement and our Term Loan Agreement contain restrictive covenants
that, subject to specified exemptions, restrict our ability to incur indebtedness, grant liens, make certain investments, pay dividends
or distributions on our capital stock and engage in mergers. The inability to obtain credit on commercially reasonable terms in
the future when these facilities expire could adversely impact our liquidity and results of operations. In addition, market conditions
could potentially impact the size and terms of a replacement facility or facilities.
Compliance with changing regulations and standards for accounting, corporate governance and public disclosure could
adversely affect our business, results of operations and reported financial results.
Changing regulatory requirements for corporate governance and public disclosure, including SEC regulations and the Financial
Accounting Standards Board’s accounting standards requirements are creating additional complexities for public companies. For
example, the Dodd-Frank Act contains provisions governing “conflict minerals,” certain minerals originating from the Democratic
Republic of Congo and adjoining countries. As a result, the SEC adopted annual disclosure and reporting requirements for those
companies who use conflict minerals mined in the named countries. There are costs associated with complying with the disclosure
requirements, including diligence to determine the sources of minerals used in our products and possible changes to sources of
our inputs.
Stockholder activism, the current political environment, financial reform legislation and the current high level of government
intervention and regulatory reform may lead to substantial new regulations and disclosure obligations. In addition, the expected
future requirement to transition to, or converge with, international financial reporting standards may create uncertainty and
additional complexities. These changing regulatory requirements may lead to additional compliance costs, as well as the diversion
of our management’s time and attention from strategic business activities and could have a significant effect on our reported results
for the affected periods.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.